Thomas Sowell: Killing the goose

Killing the goose that lays the golden egg is one of those old fairy tales for children which has a heavy message that a lot of adults should listen to. The labor unions which have driven the makers of Twinkies into bankruptcy, potentially destroying 18,500 jobs, could have learned a lot from that old children’s fairy tale.

Many people think of labor unions as organizations to benefit workers, and think of employers who are opposed to unions as just people who don’t want to pay their employees more money. But some employers have made it a point to pay their employees more than the union wages, just to keep them from joining a union.

Why would they do that, if it is just a question of not wanting to pay union wages? The Twinkies bankruptcy is a classic example of costs created by labor unions that are not confined to paychecks.

The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks. Moreover, truck drivers were not allowed to load either of these products into their trucks. And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa.

All of this was obviously intended to create more jobs for the unions’ members. But the needless additional costs that these make-work rules created ended up driving the company into bankruptcy, which can cost 18,500 jobs.

The union is killing the goose that laid the golden egg.

Not only are there reasons for employers to pay their workers enough to keep them from joining unions, there are reasons why workers in the private sector have increasingly voted against joining unions. They have seen unions driving jobs away to non-union competitors at home or driving them overseas, whether with costly work rules or in other ways.

The old-time legendary labor leader John L. Lewis called so many strikes in the coal mines that many people switched to using oil instead, because they couldn’t depend on coal deliveries. A professor of labor economics at the University of Chicago called John L. Lewis “the world’s greatest oil salesman.”

There is no question that Lewis’ United Mine Workers Union raised the pay and other benefits for coal miners. But the higher costs of producing coal not only led many consumers to switch to oil, these costs also led coal companies to substitute machinery for labor, reducing the number of miners.

By the 1960s, many coal-mining towns were almost ghost towns. But few people connected the dots back to the glory years of John L. Lewis. The United Mine Workers Union did not kill the goose that laid the golden eggs, but it created a situation where fewer of those golden eggs reached the miners.

It was much the same story in the automobile industry and the steel industry, where large pensions and costly work rules drove up the prices of finished products and drove down the number of jobs. There is a reason why there was a major decline in the proportion of private sector employees who joined unions. It was not just the number of union workers who ended up losing their jobs. Other workers saw the handwriting on the wall and refused to join unions.

There is also a reason why labor unions are flourishing among people who work for government. No matter how much these public sector unions drive up costs, government agencies do not go out of business. They simply go back to the taxpayers for more money.

Consumers in the private sector have the option of buying products and services from competing, non-union companies— from Toyota instead of General Motors, for example, even though most Toyotas sold in America are made in America. Consumers of other products can buy things made in non-union factories overseas.

But government agencies are monopolies. You cannot get your Social Security checks from anywhere except the Social Security Administration or your driver’s license from anywhere but the DMV.

Is it surprising that government employees have seen their pay go up, even during the downturn, and their pensions rise to levels undreamed of in the private sector? None of this will kill the goose that lays the golden egg, so long as there are both current taxpayers and future taxpayers to pay off debts passed on to them.

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Thomas Sowell is a senior fellow at the Hoover Institution, Stanford University, Stanford, CA 94305. His website is www.tsowell.com.

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Having worked for Goodyear and a car muffler manufacturer in my youth, all I can say is, "Thank goodness for the union."
I didn't like everything the union did, but without it my life would have been a lot worse.
And a personal note: after working in their factories and warehouses, I haven't bought one of those tires in over 44 years. And it wasn't quality or safety that was the issue.

Fear not, Sobbing Tom. As we know you and the rest of the Hoover Liars have little use for the truth most of us have become used to researching the real story for ourselves, as you bought-and-paid-for shills won't do it.

Don’t Worry, Hostess’ Top Executives Still Got Richer As Company Collapsed

Jordan Sargent

Like the rest of you, I've been worried sick this week about the fate of Hostess' top executives. Will they leave their bankrupt company with the millions of dollars they deserve? If not, who will provide for their families as they hit the unemployment line? Thankfully, we can all have a happy, stress-free weekend: Hostess executives gave themselves raises up to 300 percent even as they were preparing to file for bankruptcy.

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Hostess' 18,500 employees are now out of work, but the company's job creators escaped with enough cash to re-invest in the American worker. Take, Brian J. Driscoll, that CEO who had his salary bumped to $2.55 million by the board. He was ousted from Hostess by the Teamsters after that salary raise, but why get discouraged? He clearly has experience running a thriving and successful confectionary company, so why stop now?

I've got an idea for a new product that I think will fill the niche left by Hostess and get executives like Driscoll back on their feet. It's a yellow cake roughly the shape of a coffee filter, filled with a thin layer of vanilla icing and adorned with chocolate frosting in the design of a pinwheel. Its name: the Golden Parachute.

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This kind of information is out there and readily available. Why don't you share with it us?

Interviews with more than a dozen workers showed there was little sign of regret from employees who voted for the strike. They said they would rather lose their jobs than put up with lower wages and poorer benefits.

"They're just taking from us," said Kenneth Johnson, 46, of Missouri. He said he earned roughly $35,000 with overtime last year, down from about $45,000 five years ago.

"They have taken and taken and taken from us," said Debi White, who has worked at Hostess for 26 years, most recently as a bun handler at its bread and roll plant in Lenexa, Kansas.

"They have been walking around stomping their foot saying either you give in ... or else we're going to close you now. Well, go ahead, we're tired of their threats," she said. "That's how we feel."

belong in the dustbin of history. As usual Sowell gets the story backasswards.

Hostess has grappled for some time with rising ingredient costs and a growing health consciousness that has made its sugary cakes less popular. It filed for bankruptcy in January, only three years after emerging from a prior bankruptcy.

Bakery union President Frank Hurt has said that any labor agreements would only be temporary as Hostess was doomed anyway. The union said new owners were needed to get Hostess back on track and the only way they would return to work was if Hostess rescinded its wage and benefit cuts.

"Our membership ... just had no confidence in this management group being able to run a business," said Conrad Boos, a BCTGM local business representative in Missouri.

John Metz Owner of about 50 Denny's and Hurricane franchises in south Florida grossing over 50 million a year in profits, spoke out Friday in defiance of Obamacare, threatening to cut back employee's hours and adding a 5% charge to the service ticket specifically in the name of Obamacare. By the time mondays deposits were made, both Denny's CEO John Miller and Metz were issuing apologies after angry consumers thouroughly spanked them last weekend with a boycott affecting franchisee's nationwide.

Denny's chief executive John Miller privately reached out to Metz to express his "disappointment" with the Florida franchisee's controversial statements about Obamacare, which sparked a wave of backlash for the national restaurant chain over the past few days. Metz released a statement Monday night expressing "regret" over his statements.